RE BOLDWIN CONSTRUCTION CO LTD

HCCW 340/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 340 OF 2002

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REASONS FOR DECISION

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1. On 7 July 2006 I made the following order:

“1. The taxation hearing be adjourned to a date to be fixed with 2 hours reserved.

2. Leave is granted to the Company to participate in the hearing provided that the company file and serve a list of objections to the bill in question within 21 days hereof.

3. Costs to the company to be assessed by me at the time of hearing of the taxation with certificate for counsel and to be borne by the then Provisional Liquidators, James Wardell and Charles Chan Wai Dune personally with certificate for counsel.

4. I direct as interim payment to the Provisional Liquidators a sum of $2 million out of the fund in the accounts of Messrs. Stephenson Harwood & Lo, referred to in Clause 1 of the Order dated 10 March 2006.”

2. I now give my reasons.  By an order made on 10 March 2006 before Madam Justice Kwan, it is directed that the Provisional Liquidators (“PL”) do pay their own proper fees, costs and expenses incurred or to be incurred and that such fees, costs and expenses, if not agreed, by the Company, are to be taxed and allowed by court.

3. I believe that they had attempted to agree with the Company but failed to reach any agreement.  On 8 May 2006 the PL lodged with the Court the Debit Note No. B0627-06 dated 10 March 2006 together with the relevant documents in support for taxation.  I directed the PL to serve the company Boldwin Construction Company Limited with the Bill as well as the Report and the Notice of Hearing.  The PL through their solicitors by letter dated 2 June 2006 raised objection to my direction and considered that the process for determining the PL's fees should be done ex parte.

4. Mr. Jonathan Harris S.C. submitted that according to paragraph 4.1 of the Procedural Guide for determination/taxation of liquidators' remuneration issued under the direction of Madam Justice Kwan, the procedure should be ex parte.  It is ex parte, I quote from his written submission , “in the sense that only the provisional liquidator is present.  It is a procedure by which the Court through the medium of a master scrutinizes the remuneration of a person appointed by it to administer a company pending the determination of a winding up petition.  A provisional liquidator is not a party to adversarial litigation”.  I do not agree with that submission for the reason I shall give later.

5. Ms. Ip for the Company argues that Rules 170 of the Companies (Winding Up) Rules (Cap. 32H) provides that notice of appointment to tax be given to the party by whom the charges are to be paid.  I agree with the view of Mr. Harrris that the rule does not apply to taxation of provisional liquidator's remuneration.

6. Although Section 169 is entitled as “Taxation of costs payable by or to Official Receiver or liquidator or by company”, when we look at the contents of the various sections, it is very clear that Section 170 deals with taxation of the bills submitted by persons employed by liquidator or provisional liquidator.  It is not for the taxation of bills of liquidator or provisional liquidator.  There is no specific procedure laid down by the Companies Ordinance or its subsidiary legislation for determination/taxation of liquidator or provisional liquidator's bill of costs.  There is a lacuna.  The Procedural Guide referred to in paragraph 4 above is an attempt to fill the gap.

7. Paragraph 4.1 of the Procedural Guide is silent whether it should be ex parte or inter parte: it does not necessarily mean that the Court has specified that it must be ex parte.  It is my view that the Court always reserves the power to direct any person to take part in a hearing.  In this case, obviously the Company is interested in the fund deposited in the Court and the PL were in a fiduciary position at the time of provisional liquidation.  The Company wishes to know whether the charges are justified, and also to take the opportunity to express its view on it.

8. Mr. Harris refer me to Clause 1 of the Order made by Kwan J that an aggregate sum of $25 million (“the Monies”) is set aside in the account of Messrs. Stephenson Harwood & Lo and from the Monies the PL pay the various fees, costs and expenses including those of themselves.  It is Mr. Harris' submission that there is nothing in the order to suggest that if the fees, costs and expenses were not agreed they were to be taxed in a way other than in accordance with the Procedural Guide.

9. I have no dispute with such argument.  However, this does not mean that the Company has lost title to the Monies.  I find that the Monies are held on behalf of the Company subject to payment out in the manner as stipulated in the order.  Clause 4 of that order also states: “Such fees, costs and expenses if not agreed by the Company are to be taxed and allowed by the Court.”  It means that the agreement of the Company has to be sought and that the Company has the right to express his view on the PL's costs.  I see no reason why the Company should not be directed to participate in the taxation hearing of the PL's bill.

9. For the above reasons I make the order on 7 July 2006.